Author: Trusterra Mortgage

Infill Construction Financing

In real estate markets in many of Canada’s largest urban centres infill construction financing has become a common request by many builders and investors. Even home owners consider infill construction financing for rebuilding their homes on the existing land they are living on.

In places like Toronto, Vancouver, Calgary, Montreal and the surrounding cities of these urban centres infill construction financing applications have become a normal and routine process in attaining the funds needed to start a residential construction project. It is pretty well the same with non-residential or commercial construction projects.

This is yet another important reason why a borrower, investor, and or builder should work with a Mortgage Broker as many of them have extensive experience in working with many lenders who provide infill construction financing.

For the most part infill construction refers to the process of getting money for financing the construction of a real estate project in which the applicant has or will be purchasing an existing property and the land it is on for the purposes of knocking it down to build a new property on it. At times infill construction financing also refers to the acquisition of raw land on which plans are in place to build residential or commercial property on it.

Infill Construction Financing requirements

Each lending institution will have their own borrowing requirements, but some of these can be applied across the board with many if not all lenders.

Minimum and maximum loan amounts

Borrower qualification standards for income / employment

Credit worthiness in the way of credit checks and its history and strength

Past experience in home or commercial building projects

Lending interest rates will vary based on each projects unique realities and other variables like, location, size, and funds required.

Usually there is a lender and broker fee

Appraisals will be required throughout the project to verify land and property value before and after infill construction project

Sometimes even environmental tests must be done depending on the type of property and land currently on site

With infill construction the lenders typically give up to 100% of the hard construction costs and up to 75-80% of the lot purchase price or appraised value

The above items should give you a good idea of what is involved with applying for infill construction financing. At Trustterra Mortgage we’re always here to help our clients attain the best possible mortgage financing options available to them based on their credit and income realities. If you have any questions or wish to start on a infill construction financing project Contact Us. We would be happy to help!

Pre-Construction Mortgage Approval

Have you ever purchased a pre-construction home? If you have, then you know how the financing works, but if you are a first time home buyer and looking at purchasing a pre-construction property, then you will want to read this post about pre-construction mortgage approval.

It is common practice and policy by the builders to ask potential home buyers to get a pre-construction mortgage approval to make sure they can be qualified if they were to buy the property right now, even though pre-construction projects normally take over one year to finish.

So what do first time home buyers do? They go to their Mortgage Broker and ask him or her to qualify them on a pre-construction mortgage approval. This is no different than a regular pre-approval. In fact they’re one and the same.

When you have a pre-construction mortgage approval you are showing the builder that if the home was available to be moved in as of now your mortgage was approved and the builder would get paid.

The cautionary tale here is the fact that pre-construction mortgage approvals a.k.a. have a maximum life span of 120 days after which point they expire and there is no guarantee from the lender they will honor the rate hold or anything else on the mortgage approval.

What typically happens with pre-construction mortgage approvals is that the home buyer will return back to their Mortgage Broker no earlier than four months before the actual and final closing date of their property and apply again for an actual mortgage approval. Because this time around the pre-construction project will have been completed and be ready for transfer of ownership to the purchaser in no more than 120 days.

In this second time of applying for the mortgage the process can be more strenuous as you will need to provide a whole lot of documentation to the lender to satisfy all their conditions of approving your mortgage. Here is a list of items that the lender will ask the applicant to provide; this is just an example:

Updated mortgage application

New credit check, which the Mortgage Broker will do

Proof of income

Proof of down payment

Copy of the builders final and signed Agreement of Purchase and Sale including all schedules, waivers, amendments and any other documents that comes with the agreement

Proof that you have at least 1.5% of the purchase price in your personal accounts to cover closing related costs such as legal fee, appraisal fee …etc.

This is why we always recommend that you consult with your Mortgage Broker and work with her or him closely along the path towards your final closing date and home ownership. We recommend that you also work with a Lawyer and even consider asking a Realtor to go through the builder’s documents for you as they can catch certain things that you may not to be able to better negotiate with the price.

We’re here to answer your questions. Contact Us with any questions you have, or if you would like to start your pre-construction mortgage approval application process.

Toxic Free Energy Efficient Home

It is becoming more common ever than before to talk about or hear about energy efficient homes. As we learn more about new construction ways of building these types of homes, it is becoming more important to make sure they are also toxic free energy efficient homes.

There is a great article from the web site of the Green Living Online where Christopher Phillips of Green Homes talks about the importance of a toxic free energy efficient home.

We share with you the highlights of the article here:

Houses are becoming more energy efficient than ever before due to government regulations.

At one time, air was exchanged once an hour in a typical house. Today it’s exchanged once every five hours.

local Toronto home renovation company, consults the International Living Future Institute’s Red List and Declare, which identify toxic chemicals lurking in building materials, and attend product expos for the latest in non-toxic innovations.

Today is the start of Fraud Prevention Month 2017

As explained by the Government of Canada’s Competition Bureau “Fraud Prevention Month is an annual public awareness campaign held in March that works to prevent Canadians from becoming victims of fraud by helping them recognize reject and report it.”

For fraud prevention month 2017 there will be many organizations large and small who will be contributing informative and educational material about fraud prevention.

To get our fraud prevention month 2017 campaign off on a good start we will share these prevention tips from the Competition Bureau of Canada:

Tips to Protect Yourself from Fraud

Don’t be fooled by the promise of a valuable prize in return for a low-cost purchase.

Be extra cautious about calls, emails or mailings offering international bonds or lottery tickets, a portion of a foreign dignitary’s bank account, free vacations, credit repair or schemes with unlimited income potential.

Don’t be afraid to hang up the phone, delete the email or close your Internet connection.

Don’t purchase a product or service without carefully checking out the product, service and company.

Don’t be afraid to request further documentation from the caller so you can verify the validity of the company.

Don’t disclose personal information about your finances, bank accounts, credit cards, social insurance and driver’s license numbers to any business that can’t prove it is legitimate.

Rental Property Mortgage

Purchasing or refinancing a rental property can be a lot more complicated when it comes to getting a rental property mortgage. Another industry description of it is investment property mortgage; where investment property could be a residential rental property, or none residential property.

In Canada the Chartered Banks and many National institutional lenders offer the same discounted rates and features as regular owner occupied mortgages for rental property mortgages up to 4 units. But once you go passed the 4 unit cap then the mortgage becomes categorized as a commercial transaction and it is underwritten and viewed as such, including more strenuous ‘stress’ tests and mortgage conditions and policies.

Rental property mortgage or investment property mortgages

Are still available through the Chartered Banks but they can be very difficult to be approved by them, whereas other institutional lenders and private lenders can be more flexible and forgiving on certain personal and corporate borrower realities that the banks won’t be flexible on.

Many times than not, when a borrower cannot get their rental property mortgage application approved by the Chartered Banks they approach mortgage brokers, or mortgage agents for help. Mortgage Brokers or Mortgage Agents have specialized training and knowledge of the mortgage industry and can help with finding the suitable lender who would be the right fit for their client’s rental property mortgage.

A rental property mortgage would generally be called and categorized by some as a commercial mortgage. With these types of mortgages the time needed to get the mortgage approved and closed is much longer than traditional residential owner occupied mortgages. On average it can take one month or longer to complete a rental property mortgage transaction.

There are different sub categories or types of rental property mortgages and we will go through each of them in terms of the borrowing features they have:

Multi-Unit up to 2 units

One of the units must be occupied by the owner

Can borrow up to 95% of the appraised value

Most of the time the mortgage is portable to another property

If providing less than 20% down payment the rental property mortgage must be insured through Canada Mortgage Housing Corporation CMHC

Although CMHC allows flexibility of where the down payment comes from, most lenders do not, and require that the borrower of the mortgage has the down payment in his or her bank accounts for at least three months (two months if not insured)

Maximum amortization is 25 years

All employment and credit history / strength requirements apply

Have mortgage questions about rental property mortgages or investment properties in general?Reach out to us. We can help.

Multi-Unit 3-4 units

One of the units must be occupied by the owner

Can borrow up to 90% of the appraised value

Most of the time the mortgage is portable to another property

If providing less than 20% down payment the rental property mortgage must be insured through Canada Mortgage Housing Corporation CMHC

Although CMHC allows flexibility of where the down payment comes from, most lenders do not, and require that the borrower of the mortgage has the down payment in his or her bank accounts for at least three months (two months if not insured)

Maximum amortization is 25 years

All employment and credit history / strength requirements apply

If you are considering purchasing this type of property or refinancing an existing one please contact us.

Multi-Unit 5 units and up

With any properties of 5 units or higher Chartered Banks refer the application to their commercial departments and Mortgage Brokers or Mortgage Agents would submit their applications to specialized commercial lenders, and some who have relationships with local commercial bank branches in the locality of the subject property may also submit the application to them.

Chartered Banks work with CMHC when the clients have between 15% and up to but not including 20% down payment. Some of the National lenders also work with CMHC and may accept applications with less than 20% up to 15%.

With CMHC insured rental property mortgages a minimum of 15% down payment is required when purchasing or refinancing.

Most commercial lenders for rental property mortgages work with CMHC even if the client provides 20% down payment. This is to protect themselves in the event of a default.

CMHC also charges a premium fee for each unit in the property. Detailed calculation of the premiums are done by CMHC and provided to the lender, which is then forwarded to the Mortgage Broker or Agent to share with the client. The fee schedule could also be found on CMHC’s web site

To mitigate risk and to avoid CMHC insurance lenders will consider a lower mortgage amount and higher down payment by the borrower, normally anywhere between 60% to 70% of the appraised value.

We are here to help and accompany you through the complicated mortgage application process of multi-unit 5+ properties. Contact us and let’s work together.

To Stay or Not to Stay!

To Stay or Not to Stay is the question many home owners ask themselves when trying to decide whether to stay or not to stay with their current lender or to go to a new lender when its mortgage renewal time.

With mortgage interest rates at all time lows it makes more sense than not to consider switching your mortgage to a new lender who has a better rate than the rate your current lender can offer you at renewal time.

However most consumers do not consider this fact and do not know that it is not as cumbersome and even pretty well free to switch your mortgage from one lender to another. Many Banks and mono-line lenders have promotions that cover the cost of the client switching their mortgage to the new lender.

It is for this reason that you should consult with your trusted mortgage broker or agent, when considering to stay or not to stay with your current lender, so that he or she can assess your current situation and figure out if it is worth it for you to either stay or move your mortgage. Sometimes after doing the calculations the mortgage professional will advise you that it is not worth your time and money to switch and better to just stick with your current lender, and other times the mortgage professional will advise you that it is in fact beneficial for you to switch your mortgage to a new lender due to their lower rates and other promotions.

The most obvious reason to switch

The most obvious reason to switch your mortgage would be for many the lower mortgage interest rate that the other lender is offering. But there are other reasons why people switch their mortgage, such as not being happy with the service levels of the current lender, and wanting to take advantage of the mortgage products the other lender has to offer that the existing lender does not have.

The most obvious reason to stay

Perhaps the most obvious reason to stay with your current mortgage lender at renewal time is because of the relationship that you have developed with them throughout the years of your mortgage with the lender. Some home owners who have mortgages with the big banks want to stay with them at renewal time to take advantage of the other bank products that they may potentially be able to get approved for and receive discounts on for staying with the bank.

At Trusterra Mortgage we are here to answer your questions and help you make the right decisions when it comes to your mortgage. Don’t hesitate to Contact Us!

It’s Mortgage Renewal time

Is your mortgage coming up for renewal within the next several months? Don’t settle for less. If you don’t look around you’ll never know if your existing lender is offering you the best mortgage renewal package. This is where we come in. As a mortgage brokerage we shop around on behalf of our clients to make sure they get the best overall suited mortgage product for their mortgage renewal needs. And never compare yourself with another person’s mortgage as everyone’s personal situation could be different, which in turn will require customized approaches towards getting the right mortgage at mortgage renewal time.

Different Reasons for mortgage renewals

So you’ve been thinking lately about what to do with your mortgage. Contact us and lets think about it together. You’ve also heard that the lower your mortgage balance is the higher your home equity would be and the more money you can access from your home. That is true, as your mortgage balance decreases the percentage of the equity you can access from your home increases.

Here are some reasons why you should contact us:

You want to do a mortgage renewal for a better rate than what your current lender has offering you

You want to do a mortgage renewal to consolidate your debts and pay a lower interest rate on the new larger mortgage amount

You want to do a mortgage renewal with a new lender to add a home equity line of credit to your house

You want to do a mortgage renewal so you can change lenders to a new one because you’ve heard good things about them and like their offerings, or have other accounts with the new lender

You have other personal doing a mortgage renewal with a new lender

Perks to switch to a new lender

The lenders have internal perks, unadvertised for the general public for switching your mortgage that only the mortgage broker community knows about. For example, if we switch your mortgage the new lender could cover the legal, appraisal, and the discharge fees. Therefore not only are you benefiting with getting expert unbiased professional advice for your renewal from Trusterra Mortgage, you are also getting competitive mortgage rates, and are switching your mortgage at minimal cost to you.

If you recently got a new mortgage or renewed your existing one, you can always give us your details and let us know when to contact you for when the time comes to renew again by using our free Mortgage Renewal Reminder Service.

Ready to start or maybe you have some questions to ask first? Contact us and we’d be happy to help you.

Americans buying Canadian Real Estate

With the value of the Canadian dollar being so low in comparison to the US dollar, it’s never been a better time as it is now for Americans buying Canadian real estate.

Now that the U.S. dollar has so much buying power here in Canada, American’s are finding it difficult to avoid the opportunity to invest in their second home, or vacation property in such places as cottage country in Alberta or Ontario.

If you have considered the possibility of purchasing real estate in Canada we can help you with any mortgage related matters. As well, we would be able to connect you to Realtors in the area you are considering to buy. Contact us to find out more about your options.

Americans buying Canadian real estate are finding many options of properties to choose from with reasonable down payment requirements from the Canadian lenders.

Another good reason why Americans are buying Canadian real estate is due to their close proximity to Canada, the longest border in the world and only a few hours away in many instances.

Having very similar credit score rating systems in Canada and the United States of America the Canadian lenders accept U.S. credit reports and employment making the mortgage application process fairly routine and the same as the American would go through in the U.S.

New Mortgage Down Payment Rule

On December 11, 2015 the Finance Minister Bill Morneau announced changes to the rules related on how much mortgage down payment for government-backed mortgage insurance the consumer must provide. As stated in the Department of Finance Canada’s press release, the purpose of new mortgage down payment rule changes are “to contain risks in the housing market, reduce taxpayer exposure, and support long-term stability.”

image courtesy of Macleans.ca

The new mortgage down payment rule comes into effect on February 15, 2016 for home purchase prices above $500,000 with changes to the minimum down payment amount a home buyer can provide. Up to a home purchase price of $500,000 the 5% mortgage down payment rule is unchanged. Any amount above and beyond $500,000 the borrower must now provide 10% of the above and beyond amount.

Here’s how to calculate how much mortgage down payment you will need if the purchase price is more than $500,000.

Example

Before the mortgage down payment rule becomes effective

Purchase price: $750,000 x 5% = $37,500

Mortgage amount: $750,000 – $37,500 = $712,500

After the mortgage down payment rule becomes effective

Purchase price: $750,000

$500,000 x 5% = $25,000

$250,000 x 10% = $25,000

Total down payment you will need is $25,000 + $25,000 = $50,000

Mortgage amount: $750,000 – $50,000 = $700,000

For the above example and comparable, after February 15, 2016 when the new mortgage down payment rules come into effect the borrower will need to have an additional $12,500 to pay towards the down payment.

Curious to know how much the mortgage payment’s will be? Head over to our mortgage calculator page. You can select a mortgage rate from any of our mortgage terms on our mortgage rates page to use in the mortgage calculator.

Contact us for more complex calculations and for any questions you may have regarding the new mortgage down payment rule or any other mortgage related questions. We’re here to help!

With the advancement of the world wide web, and the progress of technology making it easier than ever for the consumer to perform research online for almost every subject under the cloud, more people are also using online mortgage calculators to find out how much their potential monthly mortgage payments would be, or how much they can get approved for.

Trusterra Mortgage also offers a mortgage calculator for visitors to explore their options. For basic calculations the mortgage calculator will get the job done, but for more advanced and accurate results it is always best to consult directly with a mortgage professional. That is why we here at Trusterra Mortgage always take the extra steps and time to really understand our clients need to be able to better serve them and provide the best suitable information and advice for our client.

As mortgage professionals we have access to an advanced industry grade professional mortgage calculator that takes into consideration all the needed numbers and information in order to provide accurate results.

Whether you are ready now to apply for a mortgage or just wondering how much you could get approved for, or want to know what would be your monthly mortgage payments, we suggest that you Contact Us, at no cost to you of course, and let us help you and answer all your mortgage related questions.